The existence of 320i allows BMW to move up the lease entry point on the 328i. Even by as little as $20 or $30 a month... at the volume they are doing, this is a significant profit driver. When you introduce a lower price option on an otherwise established product line, it is usually to signal to the consumers that the new middle priced option is the one they should go for. It's a tried and tested pricing strategy. You slice and dice the current 328i buyers... the ones looking for the stripper model will be very happy with 320i and the one that prefers lots of options will see that 328i still offers a compelling value proposition.

For sure BMW will carefully controlled the availability of 320i to the point so that it doesn't overtake the sale of more profitable 328i.

The end game here is raise the actual residual and/or lower the stated residual on the 328i (i.e. close the residual gap) so BMWFS doesn't have to eat $3,000 on each lease return.